LVS - Vegas Returns to the Isles

Las Vegas Sands' (LVS) entrance into the I-gaming space could signify a renewed interest in cyber gambling among Nevada operators.

The Vegas-based company on Monday announced an agreement with Cantor Gaming through which the two partners will launch an online casino and poker room in the second quarter of 2007.

The venture will bring LVS's popular brands--the Venetian, Sands, Palazzo and Paiza--to Internet gamblers and feature typical casino games like blackjack, roulette, baccarat, video poker and slots as well as an online poker room. Whether they will launch one site or multiple sites has not yet been determined.

The operation will be licensed in Alderney, but most of the personnel will be based in London and the servers will be in Guernsey, Cantor Gaming's headquarters. (Alderney law allows licensed operators to base servers in both Alderney and Guernsey.)

While U.S. law prohibits Internet gambling, it does not ban U.S-based companies from operating online gambling sites outside the country, provided that no bets are taken from customers located in the United States. Other Nevada casino operators have launched online gaming sites, but none have thrived. MGM Mirage Inc. launched a site licensed on the Isle of Man in 2001 but pulled out in June 2003 because it couldn't be sustained without accepting U.S. bets.

Harrah's has shown an interest in the I-gaming business over the years as well. Its Harrah's Interactive subsidiary at one point ran an online casino based in Alderney, but the so called "soft gaming experiment" was short-lived. The site, LuckyMe.com, went live in February 2004 and called it quits in October of the same year.

LVS, meanwhile, had its sights set on the I-gaming at least as far back as 2003, when its Venetian Interactive LLC subsidiary obtained a license to operate in Alderney. Richard De Pew, CEO of Venetian Interactive, said plans were delayed, however, after MGM Mirage and Kerzner Interactive shut down their unsuccessful sites in the Isle of Man. Since then, he said LVS has been "quite busy in Macau," where LVS has been a main player in transforming the territory into the next Las Vegas Strip.

Now, three years after setting a foundation in Alderney, LVS believes the time is right to give it a shot.

"This is another opportunity for our company to create greater awareness of our global brands and further establish our presence and interest in the United Kingdom market," LVS President Bill Weidner said. "Additionally, as the Internet gaming landscape continues to evolve, this effort will put us in a strong position to evaluate and react to other potential opportunities."

De Pew said LVS chose Cantor as a strategic partner because the British company is financially strong and has an ideal infrastructure for running an online casino. Cantor Gaming, an affiliate of U.K.-based financial services company Cantor Fitzgerald, provides an end-to-end solution for online casinos, including games, content, servers, payment processing and customer service. Cantor has in-house software developers and an exclusive relationship with a bank that provides payment processing for their casinos.

"We provide the full infrastructure to (licensees), and they work on marketing it to their customers," Cantor Gaming Managing Director Joe Asher explained.

Cantor runs two other white-label sites, FHM Gaming and Cantor Casino, neither of which have ever taken U.S. play.

LVS and Cantor have had some time to get to know one another, as the two companies lobbied together in Nevada in support of mobile betting legislation. Following the state legislation's passage in 2005, the companies partnered to bring wireless gambling to the Venetian casino and resort in Las Vegas.

Cantor Gaming was licensed in May 2006 by Nevada gaming regulators to operate wireless gambling devices in casinos and is expected to test the first system in Nevada at The Venetian casino resort.